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Tnuva’s price hike comes into effect, all eyes on Shufersal after boycott threat

Without many alternatives and with potential competition from smaller retailers, Israel’s largest supermarket chain may find itself fighting the dairy giant’s price rise on its own

Tobias (Toby) Siegal is a breaking news editor and contributor to The Times of Israel.

A worker stacks dairy products at a Shufersal supermarket in the Golan Heights town of Katzrin, on July 1, 2022. (Michael Giladi/ Flash90)
A worker stacks dairy products at a Shufersal supermarket in the Golan Heights town of Katzrin, on July 1, 2022. (Michael Giladi/ Flash90)

After an expected price hike came into effect Tuesday on most dairy products made by major manufacturer Tnuva, barring those whose prices are set by the government, all eyes were on Shufersal to see whether the supermarket chain would stick to its declared boycott and risk losing customers.

The roughly 4.7 percent increase on hundreds of dairy products without government-regulated prices, and some non-dairy substitutes was announced by Tnuva last week.

The affected products include most kinds of hard cheese, butter and many milk products, as well as some non-dairy substitutes like soy- and oat-based beverages and tofu. Some exceptions include certain yogurts, lactose-free milk and cottage cheese.

The average consumer won’t likely notice the change until next week, however, as most retail chains still have old stock that will gradually be replaced by newly priced products on supermarket shelves.

Shufersal, Israel’s largest supermarket chain, has said it would oppose the price hike by taking the affected products off its shelves, as it previously did with other large food manufacturers like Unilever and Tara, the country’s second-largest dairy processor.

Other than Shufersal, Yochananof is the only food retail chain known to have rejected Tnuva’s new price list so far.

Tnuva’s delivery to Shufersal branches on Tuesday only included government-regulated dairy products and unregulated products whose prices have not changed.

A Tnuva truck is seen in the Atarot Industrial zone, in northeast Jerusalem. May 01, 2015. (Miriam Alster/Flash90)

But without many alternatives for consumers and with potential competition from smaller retailers, the company may find itself fighting the price hikes on its own.

Like all retail chains in Israel, Shufersal is largely dependent on Tnuva for many of its dairy products. This dependency is currently strengthened by Shufersal’s other boycotts and by its own dairy manufacturer — Ramat Hagolan Dairies — recently ceasing all production due to financial difficulties.

Tnuva has explained the increases as being due to the “sharp rise of [the cost of] raw milk” which has increased by 24 percent since 2019 and has added NIS 400 million ($115 million) in expenses to the company.

Food manufacturer giant Strauss Group has not announced plans to increase the prices of its dairy products as of yet. But its ability to cover the expected shortages is limited.

In Shufersal’s financial statements cited by the Calcalist business daily, the company makes note of its reliance on Tnuva, saying that if “Tnuva halts its supplies for any reason, the company will only be able to partially provide certain dairy products from other suppliers.”

Meanwhile, most smaller retailers have already accepted Tnuva’s updated price list, various Hebrew media outlets have reported, and will start selling the more expensive products within days.

Other food retailers and producers are watching Shufersal to see whether its boycott proves successful or not, as consumers will need to decide whether to seek alternatives, if they exist, or pay extra for products they are long-accustomed to.

In July, Histadrut labor federation chair Arnon Bar-David called for a public boycott of import giants Diplomat, Kimberly Clark and Schestowitz, all of which had announced price hikes amid rising costs of consumer goods.

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